Nationally housing affordability improved slightly during the September quarter on the back of two interest rate drops.
Even though some financial institutions didn’t pass on the full rate cut, the latest Housing Industry of Association Affordability Report revealed affordability had improved in six of the eight capital cities.
With house prices on the way down in Darwin, it experienced the biggest improvement in affordability during the quarter.
“During the September 2016 quarter, the median dwelling price in Darwin fell by 4.5 per cent while prices in regional Northern Territory declined by some 11.3 per cent,’’ it said.
Hobart was the area with the second highest level of improvement. The report said conditions in Tasmania were very much on the manageable side, with typical mortgage repayments absorbing considerably less than 30 per cent of earnings.
Perth was in a similar situation to Darwin, with dropping house prices as a result of the resources slow down.
“More favourable affordability conditions in Perth have been driven by continued falls in dwelling prices across the city, which results in smaller mortgage loans being required,’’ the report said.
Brisbane affordability also improved but not as substantially as Perth, Darwin or Hobart.
For Queensland affordability was more favourable than it had been since the March 2003 quarter. Despite that the report said affordability conditions were “on the challenging side’’ with typical mortgage repayments absorbing more than 30 per cent of earnings.
“Brisbane compares quite well with other (capital) cities with affordability now more favourable than in Sydney, Melbourne, Darwin and Canberra.’’
Affordability improved above the national average for Sydney and Adelaide, although it was “still challenging” in New South Wales; subdued wages growth had prevented greater improvements in Sydney.
Affordability was “reasonably manageable’’ in South Australia improving in part because of wages growth, with a 4.9 per cent increase in the past year far exceeding the national average.
Affordability dropped in Melbourne and Canberra during the quarter.
Melbourne’s drops were driven by continued strong property price growth.
During the September quarter the median dwelling price in Melbourne rose by 5.4 per cent.
The deterioration of affordability in the ACT was also largely because of property price growth.
“During the September 2016 quarter the median dwelling price in the ACT rose by 3.2 per cent and at $557,500 was 9.3 per cent higher than a year earlier,’’ it said.
HIA senior economist Shane Garrett said while lenders had not all fully passed on recent interest rate cuts, the amount they did reduce helped bring the mortgage repayment burden down.
“However dwelling price growth remains strong in most capital cities and this has prevented affordability from improving more tangibly,’’ he said.
Online Source: News.com.au.